implement lean in 5 steps.
by dustin hostetler
bridging the gap
change is never easy, and the accounting profession has often shown a particular resistance to relinquishing traditional patterns. but for those firms that embrace change at all levels through process improvement initiatives such as lean six sigma, the results have been both visible and rewarding.
more: a winning culture is an intentional culture | a call for change: an open letter to each generation
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when this kind of initiative succeeds, generational conflicts melt away as the shared vision and firmwide efforts unite older and younger team members in their quest for the common goal.
lean six sigma and change management are popular concepts in accounting firms today. a key reason is because firms are discovering the ad hoc and disjointed ways of changing processes and technology in the past aren’t sustainable in today’s rapidly changing external environment. one-off improvements and best practices, at best, lead to short-term and isolated gains. without longer-term vision and understanding, changes never truly take hold and the all-important buy-in factor is often missing.
enter lean six sigma – a thought process and disciplined methodology to create an unparalleled culture of continuous improvement. a culture that both current and emerging leaders embrace and share.
at the heart of lean is a relentless pursuit of optimizing value from a client point of view. this entails identifying and eliminating waste in all its egregious forms – from redundancies and excess touches to significant waiting time between steps; from process loops because of poor quality or personal preferences to ineffective utilization of technology. you name the waste, and lean attacks it vigorously. this, of course, leads to a more effective and efficient process.
lean is often implemented in cpa firms by using a five-step process improvement approach – define, measure, analyze, improve and control (dmaic). this model is applied to both client-facing processes as well as internal ones. this powerful model of change management cuts through the inertia and challenges the status quo – to benefit the client and the firm.
the benefits can be significant in the short term. engagements are led more effectively and efficiently, which leads to improved profitability and financial performance. a solid operational foundation is built by creating capacity within a process. in essence, lean helps firms ensure that their efforts on the top line are rewarded by increases to the bottom line. firms are also discovering the long-term benefits of pursuing a lean journey.
perhaps the most significant benefit is the culture shift that begins to take shape inside firms that adopt lean. the pursuit of continuous improvement elevates the firm culture as it is embraced by all levels. and this culture shift is the catalyst for future success.
what is a culture of continuous improvement?
- it’s a culture that is focused on results, not just effort. effort is easy, and we track effort very well in our profession. it’s called charge hours. firms that embrace lean realize a focus on results leads to much better financial performance and better client service.
- it’s a culture focused on timely delivery. output goes up as turnaround times come down. both internal and external customers (clients) of the firm are satisfied. you don’t have to wait forever to get a tax return prepared or an audit section reviewed. discipline is built into the process and the strong desire to put the client first – both externally and internally – is what people care about.
- it’s a culture focused on being proactive instead of reactive. it’s easy to sit back and wait. lean forces firms to avoid that plague of reactiveness and think ahead as much as practically feasible. clients don’t find value in reactiveness.
- it’s a culture focused on switching from compliance mode to advisor mode. by removing waste and freeing up time, we are able to create capacity at all different levels in order to think and operate more strategically for clients. we call this providing delighter-level service to clients.
- in essence, it challenges the status quo – every day, every week, every year. the question, “how can we get better?” is constantly on everyone’s mind.
as with any strategic initiative within any organization, maximizing success always requires buy-in and commitment from the top. before embarking on a lean journey, it’s critical to coach and train the current leadership team on their key role in the process. if they are going to be a champion of the initiative, they need to understand what it is they are committing to doing.
i’ve had many great and successful champions of projects over the years, but one who always stands out to me is dennis sherrin, managing partner of hartmann, blackmon & kilgore in fairhope, al. his passion, forward-thinking innovation and leadership by example are models for our industry. because of his leadership and commitment, the firm has made great strides with lean over the past four years.
“we have completed lean projects in the past four years in tax, audit and accounting services,” sherrin said. “in addition to improvements in processes, productivity and profits, our teams benefited through the learning experience of being a part of lean teams. as a result, employees are engaged in continuing efforts to improve our firm. the payoff is greater employee engagement, a firm always developing ways to improve and a firm preparing for what lies ahead.”
emerging leaders also have much to gain by helping their firms implement a lean initiative. process improvement and change management are viewed as key skillsets needed to eventually lead the firm of the future. these emerging leaders are attracted to firms that embrace a culture of continuous improvement because of the desire to operate in an agile, transparent and fast environment. lean initiatives seem like a no-brainer to most emerging leaders and they are quick to embrace the culture.
one such firm is windes in long beach, ca. after just one year, not only were process and profitability goals met, but engagement in the firm and positive culture change were evident and rising.
“participation in a departmentwide lean initiative allowed us to work closely with the firm’s current leaders to prove that as emerging leaders, we possess the skills and confidence to develop and roll out policies and procedures to take the tax department to the next level,” rob henderson and christy selogie explained. “it was motivating to work with the next generation of leaders within the firm to accomplish departmentwide change and improve efficiencies through the lean process. by drilling deeply into the current infrastructure, we were able to take a hands-on approach to identify inefficiencies and communicate to our teammates the need to make changes through lean management. through this process we learned the value of departmentwide communication and transparency as well as recognizing the need to solicit feedback from all levels, from staff to partner. although it was challenging at first, we have implemented improved processes and hope to make them better through continuous improvement. initiatives to make departmentwide culture changes usually come from the firm’s leaders, but this time they empowered us to really drive the process. there is a lot to be said for that.”
in today’s rapidly changing business environment, it is my strong opinion that cpa firms can’t sit back and maintain the status quo. those that do will most definitely be falling behind. forward-thinking firms are taking advantage of the tremendous opportunity to embrace a culture of continuous improvement. i hope your firm is one of them.
discussion questions:
- what strategies can you employ to encourage recognition and adoption of process improvements by all team members?
- what are some of the areas and processes where your firm might begin its journey of change?
- how might such an initiative create a more unified perspective across generations at your firm?
- how can your firm empower emerging leaders to lead change initiatives with the full support and backing of current leadership?
dustin hostetler is a shareholder & lean six sigma consultant at boomer consulting inc., which guides accounting firms to increased performance and profitability by providing unique consulting services, peer-led communities and industry leading intellectual capital. learn more about the company and its services at www.boomer.com.